Reconciling Marketplace Advance Payments

Taxpayers must reconcile Marketplace advance payments and file Form 8962.

Whether you call it the Affordable Care Act, the ACA, or Obamacare, you are allowed a premium tax credit only if you, your spouse if filing a joint return, or a member of your family you claim as a dependent enrolled in a qualified health plan through a State-based or Federally-facilitated Health Insurance Marketplace. This credit helps eligible taxpayers pay for coverage.

Failing to file Form 8962, Premium Tax Credit, to reconcile 2019 advance payments of the premium tax credit may affect return processing and delay your refund if one is due. It may also affect your ability to get advance payments of the premium tax credit or cost-sharing reductions.

If you don’t file and reconcile your 2019 advance credit payments, you may not be eligible for advance payments of the premium tax credit in the future.

What Is the Premium Tax Credit?

The premium tax credit helps pay for health insurance coverage bought from the Health Insurance Marketplace. When a taxpayer or their family member applies for coverage, the marketplace estimates the amount of the premium tax credit they may be able to claim. This estimate is based on information the taxpayer provides about family size and projected household income. The taxpayer can then decide if they want to have all, some, or none of the credit paid directly to their insurance company. This option will lower their monthly payments.

Who Is Required to File Form 8962 to Reconcile Advance Payments?

If you have advance credit payments made on your behalf, you are required to file Form 8962 with your income tax return. This will reconcile the amount of advance payments with the premium tax credit you may claim based on your actual household income and family size.

How Do I Know If I Received Advance Credit Payments?

You or members of your family who enrolled in health insurance coverage for 2019 through the Marketplace should receive Form 1095-A, Health Insurance Marketplace Statement. This form shows the months of coverage and any advance premium tax credit (APTC) paid to your insurance company.

This form also provides information to complete Form 8962. If you have questions about the information on Form 1095-A, or about receiving it, you should contact your marketplace directly. The IRS cannot answer questions about information on Form 1095-A or about missing or lost forms.

How Does A Taxpayer Reconcile Advance Credit Payments?

Filing electronically is the easiest way to file a complete and accurate tax return. If you
received advance credit payments, you must file a tax return to reconcile even if you otherwise don’t have to file.

You should figure your premium tax credit and compare it to the amount of APTC on Form 8962. You must file Form 8962 with your tax return.

If you need assistance reconciling your Marketplace advance payments, contact your local tax professional.